REG - Aster Treasury Plc - Half-year Report

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09/11/2022 14:45

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RNS Number : 8703F  Aster Treasury PLC  09 November 2022

Aster Group trading update for the six months ended 30 September 2022

9 November 2022

 

Aster Group issues its unaudited Group trading update for the six months ended
30 September 2022, with comparatives to the audited financial statements for
the 12 months ended 31 March 2022.

Half year highlights

·    Despite a challenging political and economic climate, we have
achieved profits of £30.8m for the six months, ahead of expectations

·    Encouragingly, liquidity is at £396.8m, and in response to strong
demand for our bonds, £50 million nominal retained bonds were sold in July
2022

·    We have maintained a strong development pipeline, delivering 685
affordable homes. Looking ahead, we remain on track to complete on our
forecast to deliver over 1,300 homes by 31 March 2023

·    Our shared ownership first tranche sales are up 14.4% for the
six-month year on year period to £30.3m, demonstrating a strong market in our
areas of operation across the south of England

·    We're proud to remain a sector leader in delivering Community Land
Trust (CLT) developments. Our pipeline is growing with us set to deliver 250
CLT homes by 2029

·    In August we announced our intention with Hampshire-based disability
charity, Enham Trust, to join Aster Group (confirmed completion in October
2022). As a subsidiary of Aster Group, this will add 316 homes to our
35,000-strong portfolio, whilst retaining its name, heritage, and charity
status

·    Central and Cecil Housing Trust (C&C), which joined Aster Group
at the start of 2022, opened Grace House. This flagship scheme in St John's
Wood, London, is a 170-apartment affordable and adaptable development for
over-55s

·    Since joining the Institute of Customer Services (ICS) in 2020, we've
been working towards achieving the ServiceMark accreditation, a national
standard to understand how we compare with other housing associations and
other sectors, in relation to perceptions around customer service

·    Further to our commitment to invest £2.8m to carry out a
comprehensive stock condition survey on our homes, we have already made
excellent progress in completing 12,000 home surveys. We hope to complete the
project by the end of the financial year. This exercise will help us to better
understand any improvements that need to be made, plan more effectively into
the long-term future and inform our sustainability roadmap to 2050

·    We continue to empower our colleagues to work in locations that get
the best from their day and provide greatest business outcome. Similarly, we
endeavour to deliver homes that protect the biodiversity of our communities
and lower our carbon footprint. We remain committed to working towards every
one of our homes receiving an Energy Performance Certificate (EPC) rating of
'C' or above before 2030

·    Fundamental to our customer services offer is ensuring that our homes
remain safe places in which to live. We are pleased to confirm that this
continued focus on safety in our customers' homes is reflected in the results
across all key areas of health and safety, including 99.9% on gas servicing
and 100% fire safety actions

·    In April 2022, the Aster Foundation which focuses on enabling better
lives beyond bricks and mortar, was granted official charity status by the
Charity Commission. The charity's mission is to better at least 40,000 people
by 2030 through its impact programmes and proactive approach to tackling
social challenges. Recently, the charity's social incubator, inc. announced
its third cohort of entrepreneurs embarking on the programme designed to
support businesses focused on making positive social change

·    As an accredited Menopause Friendly Employer, we have also been
recognised for our support to our colleagues, including the 'Best Support
Group Award' in the industry-recognised Menopause Friendly Employer awards

·    Further to achieving a 14% increase in our annual Diversity and
Inclusion (D&I) benchmarking from enei (the Employers Network for Equality
and Inclusion), we gained access to the Housing Diversity Network Board
Diversity Programme, and continued to accelerate our action plan including
extending colleague networks and creating an Inclusion Steering Group

·    We recently released our third Environmental, Social and Governance
(ESG) report covering the 12 months to 31 March 2022, benchmarking our
delivery against the Sustainability Reporting Standard (SRS) for social
housing as well as the United Nation's Sustainable Development Goals (SDGs).

 

 

Financial and operating performance

Unaudited profit before tax for the six months ended 30 September 2022 was
£30.8m. Housing properties (net of depreciation) have increased to £2,122m
from £2,053m at 31 March 2022.

 

 

 Consolidated Statement of Comprehensive Income (£000)                          6 months    12 months

Sept 2022
March 2022
 Turnover                                                                      145,297     240,933
 Operating costs                                                               (114,152)   (188,618)
 Surplus on sale of housing property, plant and equipment                      11,870      22,609
 Operating Profit                                                              43,015      74,924
 Profit on disposal of other property, plant, equipment and intangible assets  -           8
 Impairment of housing assets                                                  (204)       137
 Share of profit in joint ventures                                             917         2,631
 Increase in fair value of investment properties                               -           1,153
 Net finance expense                                                           (12,909)    (27,664)
                                                                               30,819      51,189
 Gain on acquisition                                                           -           119,409
 Profit before tax for the period                                              30,819      170,598

 

 Financial indicators                                                        6 months     12 months

Sept 2022
March 2022
 Operating margin (excluding surplus on sale of housing property, plant and  21.3%       21.8%
 equipment) ¹
 Social housing operating margin²                                            25.7%       25.6%
 EBITDA MRI interest cover³                                                  190.0%      182.5%
 Gearing⁴                                                                    48.6%       50.0%

 

Following the ongoing effects of the pandemic and storms in February 2022,
there has been a focused effort to reduce the order bank and backlog for
routine repairs during the six months to 30 September 2022. We also continue
to see the catch up of major works, carried forward from the prior financial
year. Overall operating margin was 21.3%, slightly down from 21.8% in the
comparative period due to general inflationary increases across the business
and the catch up on the routine repair order bank.

Sales of shared ownership homes and open market sales homes (predominantly
delivered through joint ventures) totalled 289 units for the six months ended
30 September 2022 (12 months ended March 2022: 540). We continue to see high
demand for shared ownership properties with customers drawn to their lower
risk, particularly in the current climate. As at 30 September 2022, the Group
had stock of 72 completed shared ownership homes (March 2022: 50) available
for sale, of which 55 were reserved (March 2022: 49).

Other asset sales continue to perform ahead of budget for the period due to
the continuation of our Void Disposal Programme (VDP) and an upturn in sales
from staircasing of shared ownership homes due to the market conditions.

The gain on acquisition reflected in the comparative period, 12 months to 31
March 2022, relates to the acquisition of Central and Cecil Housing Trust
(C&C), which was recognised as a non-exchange transaction.

 

Overall customer satisfaction was 77% as at September 2022 (March 2022: 82%).
Rent arrears have been tightly managed and remained strong at 1.9% (March
2022: 1.8%) of associated revenue due to the assistance of our financial
wellbeing team. Void losses for the Group's general needs and sheltered stock
were improved for the period at 0.7% (March 2022: 0.8%).

 

Debt and liquidity

Net debt during the period has increased to £1,031m from £1,002m at March
2022. Liquidity at 30 September 2022 was £396.8m, consisting of committed and
available undrawn facilities of £270.0m, and cash and cash equivalents of
£126.8m. During the period £50m of guaranteed fixed rate secured bonds were
sold.

 

Development

The Group completed 685 affordable units in the six months ended 30 September
2022 (year ended March 2022: 768 units). Aster has seen a strong start to the
year with 56% of our delivery target of handovers achieved by the end of
September 2022. We have received the first handovers from C&C since it
became part of the Aster Group earlier this year. Planning, material and
labour delays continue to be experienced and make accurate forecasting of
programme delivery difficult. Build cost inflation and the general economic
climate are being monitored closely, alongside the approach from contractors
and developers. We have a strong pipeline of schemes and have been successful
securing both land and developer led opportunities; a good proportion of these
schemes are due to enter contract over the next quarter, adding to our
contracted pipeline of 3,434 homes. Aster is a Homes England Strategic Partner
and has secured £114 million to deliver 1,550 homes by March 2028. Grant has
been drawn down against the land purchase of 190 homes and we are forecasting
200 homes to start on site within 22/23 with first handovers commencing from
23/24.

 

Board and executive team changes

Aster Group Ltd: The members of the Executive Board are Bjorn Howard, Chris
Benn, Rachel Credidio, Dawn Fowler-Stevens, Emma O'Shea and Amanda Williams.

 

There were no changes to the Board during the six-month period to 30 September
2022.

 

Aster Treasury plc: There were no changes to the membership of the board.

 

 

Aster Group credit rating and governance

Aster Treasury plc is rated A+ (negative) by Standard and Poor's (December
2021), and G1/V1 by the Regulator of Social Housing (January 2022).

 

Notes:

¹ Demonstrates the profitability of operating assets before exceptional
expenses. Defined as operating profit, excluding surplus on sale of property,
plant and equipment, as a percentage of total turnover.

 

² Demonstrates the profitability of social housing operating assets before
exceptional expenses. Defined as operating profit derived from social housing
activities, excluding surplus on sale of property, plant and equipment, as a
percentage of total turnover.

 

³ Seeks to measure the level of surplus generated compared to interest
payable. It is a key indicator for liquidity and investment capacity. EBITDA
MRI is Earning before interest, tax, depreciation, amortisation, excluding
profit on disposal of property, plant and equipment, but including the cost of
capitalised major repairs (major repairs included). Interest includes the
group's interest payable plus interest capitalised during the year but
excluding interest on the net pension liabilities.

 

⁴ Calculated as net debt (loans less cash) as a proportion of social housing
assets. Shows how much of the social housing assets are made up of debt, and
the degree of dependence on debt finance. It also sets out the potential
capacity for further borrowing which can be used to fund the future
development of new housing.

END

For more information, please contact:

Chris Benn, Chief financial officer - Chris.benn@aster.co.uk
(mailto:Chris.benn@aster.co.uk)

https://www.aster.co.uk/corporate/about-us/investor-relations
(https://www.aster.co.uk/corporate/about-us/investor-relations)

Disclaimer

 

 

The information contained herein (the "Trading Update") has been prepared by
Aster Group Limited (the "Parent") and its subsidiaries (the "Group"),
including Aster Treasury plc (the "Issuer") and is for information purposes
only. The information contained in the Trading Update is unaudited.

The Trading Update should not be construed as an offer or solicitation to buy
or sell any securities issued by the Parent, the Issuer or any other member of
the Group, or any interest in any such securities, and nothing herein should
be construed as a recommendation or advice to invest in any such securities.

Statements in the Trading Update, including those regarding possible or
assumed future (or other) performance of the Group as a whole or any member of
it, industry growth or other trend projections may constitute forward-looking
statements and as such involve risks and uncertainties that may cause actual
results, performance or developments to differ materially from those expressed
or implied by such forward-looking statements. Accordingly, no assurance is
given that such forward-looking statements will prove to have been correct.
They speak only as at the date of the Trading Update and neither the Parent
nor any other member of the Group undertakes any obligation to update or
revise any forward- looking statements, whether as a result of new
information, future developments, occurrence of unanticipated events or
otherwise. The information contained in the Trading Update is unaudited.
Trading Updates may be based on Management Accounts rather than draft
financial statements so may not take into account all consolidation and other
adjustments as required for the financial statements. These include, but are
not limited to, corporation tax, fair value of investment properties, fair
values relating to business combinations, balance sheet reclassifications
between fixed and current asset housing stock and defined benefit pension
costs such as interest and current service cost adjustments. The group does
not anticipate these adjustments will have a material effect on the outputs.

None of the Parent, any member of the Group or anyone else is under any
obligation to update or keep current the information contained in the Trading
Update. The information in the Trading Update is subject to verification, does
not purport to be comprehensive, is provided as at the date of the Trading
Update and is subject to change without notice.

No reliance should be placed on the information or any projections, targets,
estimates or forecasts and nothing in the Trading Update is or should be
relied on as a promise or representation as to the future. No statement in the
Trading Update is intended to be a profit estimate or forecast. No
representation or warranty, express or implied, is given by or on behalf of
the Parent, any other member of the Group or any of their respective
directors, officers, employees, advisers, agents or any other persons as to
the accuracy or validity of the information or opinions contained in the
Trading Update (and whether any information has been omitted from the Trading
Update). The Trading Update does not constitute legal, tax, accounting or
investment advice.

 

 

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